Tuesday 13th of October 2009
Britons with personal debts could be suffering from rising interest rates on unsecured loans - and may be better off making repayments under an individual voluntary arrangement (IVA).
Despite the Bank of England’s base rate falling nine times to a current low of 0.5 per cent, consumers can expect to pay around 19.8 per cent interest on a personal loan of £1,000 and roughly half that on a loan of £10,000.
This ‘incentive’ to borrow more could be seen by some as a cause of debt, for which an individual voluntary arrangement (IVA) may help.
Tracy North of uSwitch.com said: "A year ago you could get a best-buy personal loan at about 6% or 6.5%. Now the rates are considerably higher. The lenders are making it very difficult for people who are struggling to make ends meet in the current economic climate."
Britons with unsecured loans of more than £15,000 could use an IVA to ease their debt worries.
It may be possible for an IVA to freeze interest rates on your debt - which could mean an end to struggling with high interest rates from lenders and the start of repaying your debt in manageable portions.
Even last month personal loan interest rates continued to climb, with a number of leading financial organisations increasing rates by up to one percentage point, explained
By Kim Parsons
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- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- Information on IVAs could benefit those with 'spend now, worry later' attitude
